US stocks retreated on Friday as investors mulled disappointing data that showed a larger than expected drop in personal income. Technology shares were hardest hit after Dell reported lower than expected quarterly earnings.
Investor sentiment took a hit from dour economic data. A government report found that personal income fell 0.7 per cent in July, the first decrease since August 2005. Economists had expected a 0.2 per cent decline.
Meanwhile purchases rose 0.2 per cent, down from a 0.6 per cent increase in June, while prices raced higher.
The Federal Reserve's preferred measure of prices, which excludes food and fuel, climbed 0.3 per cent in July. This core measure of inflation rose 2.4 per cent over the last 12 months.
Looking to equity markets, the Dow fell 171.63, or 1.47 per cent to 11543.55, while the broader S&P 500 lost 17.85, or 1.37 per cent to close at 1282.83. The NASDAQ was off 44.12, or 1.83 per cent at 2367.52.
Volumes were slim with about 915 million shares changing hands on the New York Stock Exchange ahead of the Labor Day long weekend.
Despite Friday's declines, it was a positive month for Wall Street. In August, the Dow had gained 1.5 per cent, the S&P 500 rose 1.2 per cent and the NASDAQ picked up 1.8 per cent.
Technology shares were pressured by Dell's second quarter results.
After Thursday's close, the computer maker reported income of US$616 million, down 17 per cent from last year's corresponding period. The result came in below Wall Street estimates.
Dell shares, which had advanced Thursday ahead of the results, slumped 13.8 per cent.
Elsewhere in the sector, Intel lost 3.1 per cent, Cisco was down 2.5 per cent and IBM shed 2.3 per cent. Google and Yahoo! both slid 2.2 per cent, while Apple fell 2.4 per cent.
Microsoft dropped 2.3 per cent after announcing the acquisition of a European web-comparison shopping site and its parent company for US$486 million in cash.
Marvell Technology, which makes chips for the BlackBerry and iPhone, slumped 4.4 per cent after the company said current quarter sales were below analyst expectations.
Novell bucked the trend to climb 7 per cent after reporting larger than expected quarterly earnings. The company cited rising sales of its Linux operating system.
Financial stocks backtracked after enjoying a positive string of sessions. Government backed mortgage lenders Fannie Mae and Freddie Mac tumbled 14 per cent and 14.6 per cent respectively.
Among the sector's Dow components, Bank of America slid 0.9 per cent, Citigroup was off 0.5 per cent and JPMorgan fell 1 per cent. American Express and American International Group were down 1.6 per cent and 0.1 per cent respectively.
Fellow Dow component and heavy equipment maker Caterpillar dropped 1.3 per cent even after the company said it expected full year sales to exceed previous forecasts of US$50 billion.
Other notable laggards included General Motors and General Electric whose shares fell 3.3 per cent and 2.5 per cent respectively.
NYMEX light crude for October delivery fell US13c to US$115.46 even as energy companies were closing down Gulf of Mexico operations as hurricane Gustav advanced.
Oil companies retreated with Exxon Mobil and Chevron down 1.4 per cent and 1 per cent respectively.
Meanwhile, COMEX gold for December delivery fell US$2 to US$835.20.
UKmarkets
British stocks ended slightly higher on Friday with banks leading gains. Oil companies were on the rise, while Vodafone headed lower.
The FTSE 100 was 35.40 points, or 0.63 per cent higher at 5636.60.
In the banking sector, HBOS rose 3.4 per cent on rumours that its Australian division, BankWest, could be sold. The stock was the best performer of the shortened week adding 9.3 per cent over four days.
Royal Bank of Scotland added 2.1 per cent and Barclays gained 1 per cent.
London Stock Exchange rallied 4.1 per cent after HSBC played down competition concerns following a meeting with new chief finance officer Doug Webb.
Meanwhile, Bradford & Bingley lost 2.5 per cent after reporting a first half loss of 17.2 million pounds from a profit of 129 million pounds a year earlier. The lender was hit by 155 million pounds in write downs and investment losses, and said bad debts had risen by more than half since the end of 2007.
Further advances in crude prices helped some commodity-sector firms advance, with shares of Cairn Energy up 4.2 per cent and natural-gas producer BG rising 2.7 per cent.
Oil-services firms also performed well with Petrofac up 5.1 per cent and Wood Group adding 4.7 per cent.
On the downside, shares of Vodafone fell 1.3 per cent after South African joint venture Vodacom said that it would pay US$700 million to satellite and terrestrial network services provider Gateway Telecommunications.
Also in the red, Enterprise Inns lost 3.6 per cent after downgrades by two investment banks.
European markets
Positive results lifted stocks across Europe on Friday. Financials headed north on the back of more positive data out of the US and telcos also performed poorly.
Germany’s DAX added 1.76, or 0.03 per cent to 6422.30, while France’s CAC 40 gained 21.11, or 0.47 per cent to 4482.60.
Franco-Belgian bank Dexia jumped 9.2 per cent following strong results and Fortis rose 2.8 per cent.
Allianz gained 6.2 per cent on the back of bid activity. The insurer was reported to be in advanced discussions over the sale of its Dresdner banking arm. Commerzbank, which was touted as the most likely buyer, lost 1.9 per cent.
However, it wasn’t all smooth sailing with Swedbank down 6.8 per cent amid concerns that Estonia, one of its main markets, was slipping into recession. Domestic peer SEB, which also has exposure to the Baltic states, dropped 2.7 per cent. Greece’s EFG Eurobank, which has a large franchise in south-east Europe, fell 3.4 per cent.
Also on the downside was Nokia which fell 2.2 per cent, with traders citing an upcoming change in a key MSCI index, which is likely to trigger selling, and gloomy comments from rival Samsung.
Carrefour shot up 7.2 per cent after the French group met key profit expectations for the first half and stood by its 2008 forecasts.
Retailer Ahold traded up 2.3 per cent, in a partial recovery of Thursday losses tied to the Dutch retailer reporting a profit drop. The stock was also uplifted by a JPMorgan upgrade.
Japanese markets
Japanese stocks rose 2.4 per cent on Friday, the biggest one-day percentage gain in over three weeks. The rally was led by exporters and financials after positive GDP data out of the US.
The Nikkei 225 added 304.62 points, or 2.4 per cent to 13072.87.
Exporters led the gains as Canon rose 3.3 per cent. Honda Motor and Toyota added 2.6 per cent and 3.4 per cent respectively.
Despite the broad gains Fujifilm plunged 12.4 per cent. This was the company’s largest drop in 21 years after it slashed profit forecasts by almost one quarter.
Of the financials Mitsubishi UFJ climbed 3.6 per cent, Mizuho Financial Group tacked on 4 per cent and Sumitomo Mitsui Financial Group was 4.2 per cent dearer.
Hong Kongmarkets
Hong Kong investors saw shares gain on Friday as the market experienced its best week in four months. The rally came as US data showed the economy grew at a surprisingly healthy rate, as fears eased over a global slowdown.
The benchmark Hang Seng closed up 289.60 points or 1.4 per cent to finish at 21261.89
China Mobile suffered further losses as the stock shed 0.9 per cent. The company has lost nearly $18 billion in market capitalisation in the past two trading sessions.
Bank of China recorded a 2.1 per cent increase as the lender posted a forecast beating 15 per cent in its first half net profit.
Among other lenders, China Construction Bank and ICBC gained 1.8 per cent and 1.3 per cent respectively.
Insurer, China Life continued the trend lifting 1.4 per cent higher.
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